Fuelled by an unprecedented rise in the prices of crude, U.S. airline companies made the biggest revisions of the decade, raising fares for the eighth time this year, this time by $10 to $20 per domestic round trip. Starting with United and Delta’s fare increase on Wednesday, other carriers closely followed suite while some airlines were evaluating their fare pricing in view of certain competitive routes.
Since February, the prices of crude have escalated from a per barrel price of $45 to $65.80 on Thursday, which is believably the highest since 1983. Travel analysts believe that the fare hike would hold, as even this was “not enough to offset an additional $5 a barrel in oil”. Delta, which made the maximum hike of $20, is America’s third-largest carrier after American and United and is itself fighting mounting losses and bankruptcy. United, which also in more or less the same state increased fares by $4 to $10 to pace with increased spend on fuel in 2005.
The industry that has been struggling with multifold cost variables such as surging fuel prices, huge labor outflows and increased low-cost competition has with great difficulty made it past the damage caused by the 9/11 attacks. Yet it has little option but to pass on rising costs to travelers as airline companies face losses mounting to billions of dollars and the increasing threat of bankruptcies, with little succur from higher ticket prices.
As per the US government statistics, jet fuel prices vaulted by 60 percent to between $1.70 and $2.00 a gallon, in comparison to a year ago, narrowing the bottom line of the airline industry to wafer thin. Stock prices of all key airlines headed downwards, even as American oil companies tried to keep pace with rising demand fighting refinery outages to keep the oil taps full for the world's biggest oil guzzler. Airline analysts augur another increase in fares “before August is over”. But the increases left fares uneven, as few low-cost carriers appeared to be holding out, giving rise to room for further fare movement on certain routes.
But for an industry where fare hikes balance out bankruptcy, there is waking need to look for new sources of fuel or newer means powering air-craft. Though quite a lot of money has been spent on research, even companies like Airbus Industries and Boeing have been forced to look at short-term profitability over long-term viability of new research projects. Perhaps this fare hike pinches where it matters, to fuel new strides for the future of travel.
